Utility Week

The Month in Review Brearley Pinchbeck 6 | JULY 2022 | UTILITY WEEK "Network companies need to do better, not just to prevent power disruptions, but to ensure that when power is off, they work smarter to get people back on power quicker, and keep customers informed with accurate and timely information. This is the very least customers should be able to expect." Jonathan Brearley, chief executive, Ofgem, releasing a report on networks' responses to Storm Arwen. See p.22-23 for more The Month in Review T he energy regulator is pushing ahead with plans requiring suppliers to ring- fence customer credit balances and Renewables Obligation (RO) payments. In a policy consultation on strengthening retail financial resilience, Ofgem stressed it wanted to support an environ- ment where "retail suppliers are financially resilient, and where risks are not inappropriately passed to consumers". The consultation sets out Ofgem's proposals to protect customer credit balances and RO payments, so they can be transferred to a new supplier in the case of a market exit. It also sets out its initial thinking on how failed supplier hedges can be passed on and calls for all suppliers to be required to maintain "sufficient minimum levels of capital to survive mar- ket shocks". Ofgem chief executive Jona- than Brearley said: "By ensuring that suppliers are operating Ofgem credit balance proposal divides sector greater urgency to protect cus- tomers fully and to prevent the events of last year ever happen- ing again". He added: "While some energy companies argue that prices will increase if they have to ring-fence customer deposits, they won't. Energy companies must be adequately capitalised by their shareholders so that if they fail, the shareholders feel the pain, not the hard pressed UK consumer – it really is as simple as that." However, Octopus Energy chief executive Greg Jackson called the plans "ill-considered" and "financially illiterate". He said: "The regulator should resist pressure from com- panies to adopt ill-considered ideas that would make the crisis worse for customers and more profitable for suppliers." Octopus favours an insur- ance protection policy for credit balances. James Wallin, editor well-financed, sustainable, and more resilient business mod- els, we can avoid the supplier failures we saw last year which caused huge stress and worry and added costs to everyone's bills. "But if some do still fail, consumer credit balances and green levy/renewables payments will be protected. Currently they are used by some suppliers like an interest-free company credit card. Moving forward, all suppliers will have to have enough working capital to run, without putting their customers' credit balances at risk. Today's proposals will make sure that customers' hard-earned money is properly protected so that a company must foot the bill if it fails, rather than consumers picking up the tab." Centrica's chief executive Chris O'Shea welcomed the pro- posals but said he was "worried at the length of time it is taking to make the changes necessary". He urged Ofgem to "work with UKPN identifies priority water sites in the event of power outages UK Power Networks (UKPN) has worked with Thames Water to identify water infra- structure sites that should be prioritised for reconnection during power cuts to ensure customers are not le" without water as well. The distribution network operator (DNO) is also plan- ning to undertake similar exercises with other water companies in its licence areas across London, the South East and the East of England. UKPN said that even a momentary loss of power at an operational site can affect the water system in an area for several hours a"erwards and lead to sewer flooding in the wastewater system. It therefore worked with Thames Water analyse historical data on power cuts to establish where they happened, the root causes and how they affected water infrastructure. The DNO said this enabled the company to flag nearly 2,269 additional Thames Water sites, plus a further 5,566 other water utility sites, in its records. It said if a water infrastructure site experi- ences a power cut, its crews will now be able to tell how water and wastewater ser- vices could be affected and respond accordingly. Too many suppliers have failed with debts that have to be paid by the rest of the industry

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